HELOC vs Home Equity Loan Calculator

Tapping home equity comes down to a choice between two instruments, and which one fits depends on the numbers behind your situation. A Home Equity Line of Credit (HELOC) and a traditional home equity loan carry different cost structures, so with average home equity reaching $299,000 in 2026 and rates settling around 7-8%, the wrong pick can cost thousands in extra interest over the life of the debt.

Here the comparison runs on total interest cost. On one side is the HELOC's variable rate, generally the prime rate plus a margin; on the other is the home equity loan's fixed rate. The analysis layers in draw periods, repayment phases, closing costs, and how you actually plan to use the money, then reports which structure produces the lower overall borrowing cost for the needs you've projected.

Worth weighing carefully: a HELOC's rate can swing hard during the draw period, which makes budgeting tougher than it is with a fixed home equity loan. Borrowers also routinely overestimate how much of their credit line they'll draw, and reaching for a HELOC to cover a single one-time expense often ends up pricier than a straight loan would have been. Judge either option against the full 20-30 year term rather than the comfort of the opening payments.